EEU economic crisis necessitates change in Russian economy – experts

The crisis in the Eurasian Economic Union (EEU) demonstrates that Russia needs to change its economic policy to avoid further negative implications, a Russian economist said today, warning of real risks for the other member states of the bloc.

Speaking at a televised space bridge on Thursday, Vyacheslav Kholodkov, who heads an economic research department at the Russian Institute for Strategic Research, attributed the current downturn in Russia’s economy to oil-reliant economic policies which, he said contribute to the national currency’s unprecedented decline.

He added that the current slump hit the country’s economy back in 2012, undermining serious processes. “The strong dependence on oil products negatively affects Russia’s economy and the integration process,” Kholodkov said.

Admitting that the Russian currency depreciates against plummeting oil prices, Alexander Shirov, a deputy director at the Russian Academy of Sciences, noted that the misbalance between the Ruble and the national currencies of Kazakhstan and Belarus was a problem back in 2009. “Armenia is the only country that maintains the currency exchange rate. What’s negative is that Russia cannot be a financial donor under the circumstances to help countries such  as Armenia, Kyrgyzstan and partially also Belarus. We certainly have to outlive the financial shock, but with the reduced economy volumes, it isn’t obviously easy to avoid negative outcomes,” he added.

Aza Mihranyan, a leading researcher from the Institute of CIS countries, cited several factors explaining the Armenian currency’s stability. “Armenia is in a unique condition unlike the other member states. And that’s due to the distance. That, on the one hand, decreases the chances of using all the advantages, but on the other hand, appears to be the very factor ensuring stability for Armenia. That’s an opportunity for concentrating more on the domestic resources. And also, the export is equally distributed both across the EEU and the EU,” she noted.

Commenting on the economic difficulties for the EEU members, Mihranyan agreed that the integration process across the bloc are closely linked to the oil prices. “We have to remember, however, that there are project that can more or less save the situation under any conditions. We need a close cooperation among the countries to promote a micro-integration and development in several sectors,” he added.